nada used ar guide - a global market research · pdf filenada used ar guide® and its logo...

NADA Used Car Guide Industry Update

NADA Used Car Guide Industry Update

NADA Used Car Guide and its logo are registered trademarks of National Automobile Dealers Association, used under license by J.D. Power and Associates. ©2016 J.D. Power and Associates

NADA Used Car Guide, a division of J.D. Power | nada.com/b2b

March 2016

Wholesale Prices Down in February

Prices fall nearly 1% compared to January

Used Vehicle Price Index Declines

Index drops 3% to 118.6

New Vehicle Sales Increase Significantly

Deliveries up 6.7% for the month

Incentive Spending Rises Once Again

Average spending per unit grows 13.2% year-over-year

Guidelines | March 2016

NADA Used Car Guide® and its logo are registered trademarks of National Automobile Dealers Association, used under license by J.D. Power and Associates.

© 2016 J.D. Power and Associates

NADA Used Car Guide, a division of J.D. Power 8400 Westpark Drive, 6th Floor| McLean, VA 22102 | 800.544.6232 | nada.com/b2b

2

NEW & USED MARKET TRENDS

USED MARKET UPDATE

Wholesale used vehicle prices historically rise in

February as dealers prepare for the increase in

consumer demand that accompanies the onset of

spring. In fact, up to this year prices had moved

higher in February for 20 years straight. The streak

came to an end last month, however, as wholesale

prices of vehicles up to eight years in age fell by

nearly 1% from January. An above average increase in

late-model supply was likely partially responsible for

the month’s subpar performance as auction volume

of 2014 and 2015 models increased by an average of

roughly 20% from January to February. While it’s

normal for volume to grow over the period, the rise

was four times larger than what occurred on a like-

model age basis in the two years prior.

Overall, February’s weak performance pulled NADA

Used Car Guide’s seasonally adjusted used vehicle

price index down by 3% from January to 118.6. The

decline is the largest recorded for any month since

November 2009. In addition, the index stood at 123.8

last February, or more than 4% above this year’s

level.

TABLE OF CONTENTS

New & Used Market Trends ........................................................................................................ 2

Economic Update ......................................................................................................................... 9

At NADA Used Car Guide ............................................................................................................. 11

70

80

90

100

110

120

130Ja

nu

ary

20

10

= 1

00

Month

NADA Used Vehicle Price IndexVehicles up to eight years in age. Seasonally adjusted.

Source: NADA Used Car Guide

Feb 2016:

Index falls 3.1% to 118.6

-2.2%

-2.1%

-1.9%

-1.7% -1.6%

-1.3%

-1.1% -1.1%

-0.9% -0.9% -0.9% -0.8% -0.8% -0.7%-0.6% -0.5% -0.5%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

Pri

or

Mo

nth

Ch

ange

Monthly Change in Wholesale Used Vehicle Prices - Jan vs. Feb 2016Vehicles up to eight years in age.

Source: NADA Used Car Guide

http://www.nada.com/b2b/





3

Luxury segments fared worst last month. Luxury compact car, large utility, and mid-size

utility prices fell by an average of 2%, while luxury mid-size car, large car, and compact

utility prices dropped by 1.1% – 1.7%. Luxury losses were generally most severe for the

2013 and 2014 model years.

With prices down 1.6%, the compact car segment posted the weakest non-luxury

performance in February. Reversing long held roles, large pickup and utility losses

outpaced those of other car segments as prices for the two fell by an average of 1%.

Prices were softest for 2015 models, particularly those from GM. Prices for remaining

segments — subcompact cars, mid-size cars, mid-size utilities, etc. — fell by less than

1%.

Given February’s atypically poor showing, prices year-to-date are much lower than over

the first two months of 2015. Subcompact and compact car prices are down by an

average of 3% compared to Q4 2015; prices for the pair were up by nearly 1% over the

first two months of 2015. Year-to-date declines for other mainstream segments range

from 1% (mid-size pickups) to 2.4% (compact utilities, large pickups, and mid-size vans).

Luxury car prices are down by an average of 4.5% year-to-date, while luxury utility prices

are off by just over 3%. Prices for the two were down 3% and 1.5%, respectively,

through February 2015.

AUCTION VOLUME TRENDS

Compared to the four prior weeks, auction volume of units up to eight years old rose by

9% to 355,000 units over the period ending February 27th. Monthly gains were led by

the 2014 and 2015 model years where auction sales grew by 20% and 17%, respectively,

to totals of 53,300 and 63,000. Volume for the 2013 model year rose by a lesser 8%. The

off-lease laden group easily maintained its dominate share of total auction sales (22%

versus 2015's 18% share). Supply for other model years increased by 3% – 5%, save for

the 2012 model year where volume fell by 3% compared to January.

Auction volume reached a total of 681,000 units over the first two months of the year,

up 1% from 2015. The rather small increase is mostly due to a falloff in one-year-old

volume. The number of 2015 model year sales collected so far this year is 12% below

[ NEW & USED MARKET TRENDS CONTINUED ]






4

what was recorded for 2014 models over the same period last year. Given that one year

old auction volume is predominantly composed of off-rental units, and that new vehicle

registration data shows 2015 model year rental sales surpassed 2014 model sales by 7%,

it wouldn't be surprising to see an accentuated increase in 2015 volume moving

forward.

MARCH USED VEHICLE PRICE FORECAST

NADA Used Car Guide’s March 2016 forecast has prices of vehicles up to eight years old

rising by 2% – 2.5% versus February. That established, February’s second half rebound

could portend a stronger than expected performance. Prices were down by 2.6% over

the first half of the month, before improving by more than 1.5-percentage points over

the second half.

Across mainstream segments, price growth is expected to be more pronounced for cars

than trucks. Subcompact, compact, mid-size, and large car prices are forecast to rise by

an average of roughly 2.5%, while pickup and utility growth is expected to max out

between 1.5% – 2%. Mid-size van prices are scheduled to rise by approximately 2.5%.

Generally speaking, the outlook for car prices is similar to what occurred in March last

year, while utility and pickup growth is expected to be a bit less. Luxury car and truck

prices are forecast to grow by 1% – 1.5% save for luxury large cars where prices are

expected to rise by 0.5%.

Depreciation is expected to return in April as used prices are forecast to fall by 1% –

1.5%, similar to the 1.2% drop that occurred last year.

MARCH OFFICIAL USED CAR GUIDE VALUE MOVEMENT

Trade-in values in March’s edition of the NADA Official Used Car Guide® increased by

0.6% relative to February. Car values were raised by 1%, while truck values were

lowered by 0.2%. This is the first time in 10 months that cars have outpaced their truck

counterparts. Falling by an average of 1.7%, upper compact cars performed the worst

for the second straight month. Despite extremely affordable gasoline, entry subcompact

cars values were increased by 3.1%, which was the best of any segment for the month.

Non-luxury vehicle values grew by 0.7%, while luxury vehicle values were lowered by







5

0.5%.

NEW VEHICLE SALES CLIMB BY 6.7%, SAAR AT 17.43M UNITS

After being slowed down by winter storms and other inclement weather in January, the

industry picked up the pace last month with new vehicle sales rising by 6.7%. The

seasonally-adjusted annual rate (SAAR) was essentially static from prior month, finishing

February at 17.43 million units.

U.S. AUTOMAKERS DRIVE DELIVERIES UP

BY 8.8%

Domestics altogether achieved an 8.8% sales gain

year-over-year, but the result would’ve been better

had General Motors not underperformed.

GM deliveries fell by 1.5% as volume brands

Chevrolet and GMC each sold fewer vehicles than

they did a year ago. On a positive note, Cadillac sales

improved slightly thanks to its Escalade while Buick

exhibited the highest growth among the company’s

brands due to solid demand for its Enclave and

Encore models.

Ford Motor Company led the pack with 20% growth

as Ford brand sales increased by well over 19%.

Though many of the Blue Oval’s models were

popular with buyers last month, the Edge, Explorer

and Focus were arguably the best performers.

Lincoln also did its job by pushing sales up by over

30% as every one of its offerings beat last year’s

results.

Fiat Chrysler achieved an 11% improvement in

deliveries as all of its Jeep and Ram products on sale bested their 2015 results. Dodged

followed suit with a 12% gain of its own as its Caravan and Durango models led the way.


-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0.0

0.2

0.4

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1.0

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1.6

1.8

Pe

rcen

t Ch

ange

Sale

s V

olu

me

(m

illio

ns)

Month

New Vehicle SalesNew Vehicles Sales YoY Change

Source: WardsAuto

0%

2%

4%

6%

8%

10%

12%

11

12

13

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19

Pe

rcen

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ange

Ne

w V

eh

icle

SA

AR

(m

illio

ns)

Month

New Vehicle SAARSAAR YoY Change

Source: WardsAuto






6

IMPORT SALES RISE BY 4.9%, GERMANS CONTINUE TO SLIDE

Foreign automakers trailed domestics again last month, but their collective 4.9% sales

increase was a significant improvement over January’s performance. Japanese and

South Korean brands each achieved 6.4% growth;

however, German deliveries fell by 6.8% altogether as

Volkswagen, BMW and Daimler sales decreased by 13%,

12% and 0.5%, respectively. Notably, small European

automakers Jaguar Land Rover, Volvo and Porsche all

exhibited double-digit growth despite the struggles of

the larger German makes.

American Honda Motor Co. was one of the biggest

movers in February with nearly 13% sales growth even

though Acura deliveries declined by 1.7%. The Honda

brand exhibited a 15% gain as the Civic, Accord and CR-V

were in high demand last month.

Nissan North America also fared well, increasing

deliveries by over 10%, but its Infiniti luxury brand saw

sales decrease by 11% as each one of its models sold

fewer cars aside from the QX50 and QX70. Meanwhile,

the Nissan brand realized a 13% gain thanks mainly to

the Sentra, Murano, Maxima and Quest.

Toyota Motor Sales experienced the least growth

relative to its Japanese Big Three counterparts, but each

one of the company’s brands was successful in

improving sales last month. Scion’s new iA and iM

models helped the brand increase deliveries by 52% just

as the organization announced that Scion will be

discontinued after this year. Solid growth from the RAV4

and Tacoma pushed Toyota brand sales up 3.5% while strong NX demand allowed Lexus

to squeeze out a 0.4% sales improvement.


Mainstream Brand Performance (Units Sold)

Change From

Feb-16 Jan-16 Feb-15 Month Ago Year Ago

Buick 17,811 18,269 17,418 -2.5% 2.3%

Chevrolet 158,644 137,803 159,788 15% -0.7%

Chrysler 21,056 18,214 28,502 16% -26%

Dodge 47,251 42,109 42,115 12% 12%

Fiat 2,993 2,594 3,289 15% -9.0%

Ford 202,764 160,850 169,711 26% 19%

GMC 39,530 36,933 42,433 7.0% -6.8%

Honda 106,213 90,246 92,474 18% 15%

Hyundai 53,009 45,011 52,505 18% 1.0%

Jeep 68,228 59,032 55,642 16% 23%

Kia 49,737 38,305 44,030 30% 13%

Mazda 21,544 19,703 25,650 9.3% -16%

Mini 2,839 3,238 3,720 -12% -24%

Mitsubishi 7,870 6,264 7,533 26% 4.5%

Nissan 120,540 97,220 106,777 24% 13%

Ram 41,890 32,027 33,338 31% 26%

Scion 5,882 5,099 3,864 15% 52%

Smart 422 399 458 5.8% -7.9%

Subaru 42,011 41,101 41,358 2.2% 1.6%

Toyota 158,982 135,251 153,608 18% 3.5%

Volkswagen 22,321 20,079 25,710 11% -13%

Source: WardsAuto

Luxury Brand Performance (Units Sold)

Change From

Feb-16 Jan-16 Feb-15 Month Ago Year Ago

Audi 11,718 11,850 11,455 -1.1% 2.3%

BMW 22,498 18,082 25,201 24% -11%

Acura 12,773 10,250 12,992 25% -1.7%

Alfa Romeo 49 67 47 -27% 4.3%

Cadillac 11,840 10,740 11,739 10% 0.9%

Infiniti 10,371 8,514 11,659 22% -11%

Jaguar 1,512 1,352 1,410 12% 7.2%

Land Rover 6,417 5,655 4,917 13% 31%

Lexus 23,090 20,933 22,995 10% 0.4%

Lincoln 8,039 7,177 6,164 12% 30%

Mercedes-Benz 25,210 26,563 25,291 -5.1% -0.3%

Porsche 3,561 4,354 3,202 -18% 11%

Volvo 5,260 4,244 4,012 24% 31%

Source: WardsAuto






7

INCENTIVES UP 13.2% VERSUS LAST FEBRUARY

Average incentive spending was $3,035 per unit in February, which was a 13.2%

increase year-over-year, per Autodata.

The U.S. Big Three each opened up their wallets as General Motors, Ford Motor

Company and Fiat Chrysler increased spending per unit by 30%, 20% and 17%,

respectively.

American Honda Motor’s performance last month

looks even better when you consider its incentives

were cut by almost 18% per unit. Meanwhile, Toyota

Motor Sales spent about 11% more per unit

followed by Nissan North America with its 6.9%

spending increase per unit.

BMW’s incentives increased by over 21% reached

nearly $5,000 per unit yet the brand was unable to

prevent sales from sliding in February. On the flip

side, Mercedes-Benz nearly matched its sales from a

year ago despite spending 5.9% less per unit. Audi

found itself somewhere in the middle with modest

sales growth resulting from an 8.8% climb in

incentives per unit.

Among other notable brands was Volkswagen, which

exhibited a 39% jump in spending per unit versus

last year as it continues to grapple with falling sales

resulting from its diesel emissions crisis.

Additionally, although Subaru deliveries grew by just

1.6%, the company’s incentives declined by another

31% to just $557 per unit.

DAYS’ SUPPLY FALLS BY 9 DAYS

After inventory levels rose to start the year, days’ supply fell again by 9 days in February

to end the month at 69 days, which is the same as a year ago.


-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

$2,400

$2,500

$2,600

$2,700

$2,800

$2,900

$3,000

$3,100

$3,200

Pe

rcen

t Ch

ange

Ave

rage

Ince

nti

ve S

pe

nd

ing

Month

IncentivesAverage of Total YoY Change

Source: Autodata

-12

-7

-2

3

8

13

18

0

10

20

30

40

50

60

70

80

90

Day C

han

ge

Day

s o

f Su

pp

ly

Month

New Vehicle Days' SupplyDays' Supply YoY Change

Source: WardsAuto






8

Fiat Chrysler and Ford Motor Company exhibited 89 and 84 days’ supply, respectively,

which was less than January’s levels by over two weeks. General Motors’ 67-day supply

was just below the industry average and a 7-day reduction from the prior month.

Each of the Japanese Big Three had inventory levels below the industry average with the

lowest being Toyota Motor Sales’ 50-day supply, which was down 6 days month-over-

month. Nissan North America’s inventory level fell by 12 days to hit 59 days by month-

end while American Honda Motor’s days’ supply decreased to 66 days after falling by 7

days since the previous month.

The automaker with the smallest inventory was once again Subaru at 25 days.







9

During the fourth quarter of 2015, U.S. economic growth slowed, yet beat initial

estimates. With businesses less aggressive in their efforts to reduce unwanted

inventory, GDP increased at a 1.0% annual rate, surpassing a 0.7% pace in its second

GDP estimate.

The largest contributors to upward revision of inventory investment were retail trade,

mining, utilities and construction. The increased inventory build is bad news for first

quarter GDP growth since it indicates businesses will have little incentive to place new

orders, which will continue to hold down production.

First quarter 2016 GDP growth forecasts are as high as 2.5%, but the risks are tilted to

the downside amid slowing world economies, a strong dollar, and a recent global stock

market sell-off that has tightened financial market conditions.

Consumer spending in the U.S. rose solidly in January as underlying inflation rose by the

most in four years, keeping Federal Reserve interest rate increases on the table this

year. The Commerce Department reported consumer spending increased 0.5% as

households ramped up purchases of a range of goods, and the return to normal winter

temperatures boosted demand for heating. Consumer spending, which accounts for

more than two-thirds of U.S. economic activity, rose by an upwardly revised 0.1% in

December.

Since June 2015, the monthly average for regular unleaded gasoline has dropped

steadily from $2.80/gallon to $1.76/gallon in February. Consumers have happily

embraced the 37% decline in prices over that time, and although prices have already

begun to move upward as they typically do in March, the industry expects prices to

remain at these lower levels when compared to the last two years.

While Brent and WTI crude oil pricing have rebounded to the $30 – $40 per barrel

range, it is likely this is a seasonal increase and not growth in global demand. Due to

overwhelming global supply, demand for crude would need to increase substantially

over the next year to impact prices. For the time being, consumers should be less fearful

of rising oil prices given that at $50 per barrel, prices would still be 22% below the May

2015 high of $64 per barrel.

[ ECONOMIC UPDATE ]






10

Amid fears the U.S. could be joining a global slowdown, the economy added a better-

than-expected 242,000 jobs in February while the unemployment rate held steady at

4.9%. Despite the strong number, average hourly wages declined for the month, falling

3 cents and equating to a 2.2% annualized jump. The average hourly work week also

declined 0.2 hours to 34.4.

A separate unemployment gauge, which includes Americans not actively looking for a

job or who work part-time for economic reasons, fell to 9.7% — the lowest reading since

May 2008. A declining labor force participation rate played a big role in the decline of

the headline jobless number, but the gauge rose in February to 62.9%, its highest level

since January 2015.

The median annual home price was $213,800 in January. This is down 4.2% from

December and up 8.2% from the previous year. New U.S. single-family home sales

tumbled in January from a 10 month high as sales in the West region plunged.

According to the Commerce Department, sales dropped 9.2% to a seasonally adjusted

annual rate of 494,000 units, almost unwinding December's sharp increase. December's

sales pace was unrevised at 544,000 units.

Last month, the inventory of new homes on the market increased 2.1% to 238,000 units,

the highest since October 2009. Still, housing stock remains tight. At January's sales pace

it would take 5.8 months to clear the supply of houses on the market, up from 5.1

months in December.

Though the new homes market appears to have cooled, with construction activity falling

in January and homebuilder sentiment softening in February, housing in general remains

supported by a tightening labor market, which is lifting wage growth and bolstering

household formation.

[ ECONOMIC UPDATE continued ]






11

AT NADA USED CAR GUIDE

About NADA Used Car Guide, a division of J.D. Power and Associates

Since 1933, NADA Used Car Guide has earned its reputation as the leading provider of vehicle valuation products, services and information to businesses throughout the United States and worldwide. NADA Used Car Guide’s team collects and analyzes over one million combined automotive and truck wholesale and retail transactions per month. Its guidebooks, auction data, analysis and data solutions offer automotive/truck, finance, insurance and government professionals, the timely information and reliable solutions they need to make better business decisions. Visit nada.com/b2b to learn more about solutions for your business and nada.com/usedcar to stay abreast of the latest used and new vehicle market trends.

Financial Industry, Accounting, Legal, OEM Captive Steve Stafford 800.248.6232 x7275 [email protected]

Director, Sales and Customer Service Dan Ruddy 800.248.6232 x4707 [email protected]

Automotive Dealers, Auctions, Insurance, Credit Unions, Fleet, Lease, Rental Industry, Government Doug Ott 800.248.6232 x4710 [email protected]

Director, Business Development James Gibson 800.248.6232 x7136 [email protected]

What’s New

The new NADA Values Online introduces New Vehicle Values, a range of values that provide

new vehicle pricing guidance based on actual market transactions and market influencers. It also

includes inventory valuation, vehicle valuation trends and a custom reporting tool to help you see

vehicle values from every angle.

With NADA Values Online, you have the data and insight you need to make better business

decisions and see better outcomes.

See how we can help your business >> Go to nada.com/valuesonline.

On the Road

Learn how vehicle residual values are expected to perform from Jonathan Banks at the Conference of Automotive Remarketing in Las Vegas on March 17.

Mike Stanton and NADA Used Car Guide staff will attend the 2016 Automotive Forum in New York City on March 22.

Meet up with members of NADA Used Car Guide staff in New York at the New York International Auto Show, March 23 – 24.

Learn from Jonathan Banks at the AFSA 20th Vehicle Finance Conference and Expo in Las Vegas, March 29.

Mike Stanton, Jonathan Banks, Dan Ruddy, Jim Gibson and members of the NADA Used Car Guide staff will attend the 2016 NADA Convention in Las Vegas, March 31 – April 3. Be sure to stop by NADA Used Car Guide Booth #915C to receive a product demonstration of either NADA Values Online or NADA MarketValues and be entered to win a Fitbit Charge HR™ smart fitness tracker.


http://www.nada.com/b2b

http://www.nada.com/usedcar

nada.com/valuesonline





12

NADA USED CAR GUIDE CONSULTING SERVICES

NADA Used Car Guide’s market intelligence team leverages a database of nearly 200 million automotive transactions

and more than 100 economic and automotive market-related series to describe the factors driving current trends to

help industry stakeholders make more informed decisions. Analyzing data at both wholesale and retail levels, the team

continuously provides content that is both useful and usable to the automotive industry, financial institutions,

businesses and consumers.

Complemented by NADA Used Car Guide’s analytics team, which maintains and advances its internal forecasting models

and develops customized forecasting solutions for automotive clients, the market intelligence team is responsible for

publishing white papers, special reports and the Used Car & Truck Blog. Throughout every piece of content, the team

strives to go beyond what is happening in the automotive industry to confidently answer why it is happening and how it

will impact the market in the future.

VP, Vehicle Analysis & Analytics Jonathan Banks 800.248.6232 x4709 [email protected]

Senior Manager, Market Intelligence Larry Dixon 800.248.6232 x4713 [email protected]

Senior Automotive Analyst David Paris 800.248.6232 x7044 [email protected]

Senior Automotive Analyst Joseph Choi 800.248.6232 x4706 [email protected]

ADDITIONAL RESOURCES

Connect with NADA Used Car Guide

White Papers NADA Used Car Guide’s white papers and special reports aim to inform industry stakeholders on current and expected used vehicle price movement to better maximize today’s opportunities and manage tomorrow’s risk.

Used Car & Truck Blog Written and managed by the Market Intelligence team, the Used Car & Truck Blog analyzes market data, lends insight into industry trends and highlights relevant events.

Perspective

Leveraging data from various industry

sources and NADA Used Car Guide’s

analysts, Perspective takes a deep dive

into a range of industry trends to

determine why they are happening and

what to expect in the future.

Guidelines Updated monthly with a robust data set from various industry sources and NADA Used Car Guide’s proprietary analysis, Guidelines provides the insight needed to make decisions in today’s market.

Read our Blog nada.com/usedcar

Follow Us on Twitter @NADAUsedCarGde

Find Us on Facebook Facebook.com/NADAUsedCarGuide

Watch Us on YouTube Youtube.com/NADAUsedCarGuide

Disclaimer: NADA Used Car Guide makes no representations about future performance or results based on the data and the contents available in this report (“Guidelines”). Guidelines is provided for informational purposes only and is provided AS IS without warranty or guarantee of any kind. By accessing Guidelines via email or the NADA Used Car Guide website, you agree not to reprint, reproduce, or distribute Guidelines without the express written permission of J.D. Power and Associates.


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